Don't forget about 1031 exchanges! If you're planning to buy another investment property, you might be able to defer ALL of your capital gains and depreciation recapture taxes. I've done this twice now with rental properties. The rules are strict though - you need an intermediary to hold the funds, identify potential replacement properties within 45 days, and complete the purchase within 180 days. But it can be a huge tax saver if you're just planning to roll the money into another investment property anyway.

Make sure you're tracking your "selling expenses" separately from your "closing costs" - they're treated a bit differently for tax purposes. Selling expenses (like real estate commissions, advertising, legal fees directly related to the sale) directly reduce your capital gain. Also, don't forget that if you owned and lived in the property as your primary residence for at least 2 of the 5 years before selling, you might qualify for a partial exclusion of capital gains ($250k for single, $500k for married filing jointly) even though it was a rental at the end! This depends on when you converted it from primary residence to rental.

I'm sorry for your loss, Liam. Based on your situation, here are a few additional considerations that might help: Since you're dealing with a $175k distribution, make sure to ask the 401k administrator for a detailed breakdown of the account. Some plans have both pre-tax and Roth components, and the tax treatment differs for each portion. The Roth portion (if any) would have already been taxed and wouldn't be taxable again to the estate or beneficiaries. Also, given the substantial amount involved, you might want to consider whether the estate should make quarterly estimated tax payments once you receive the distribution. If you're planning to distribute the funds to beneficiaries quickly, this becomes less of an issue since the tax liability passes through via K-1s. But if there's any delay in distributions, the estate could face underpayment penalties. One practical tip: when you do distribute the funds to yourself and your sister, document everything clearly. Create a simple distribution statement showing the date, amount, and purpose (e.g., "Distribution of 401k proceeds per estate plan - 50% to each beneficiary"). This documentation will be crucial when preparing the estate's 1041 and the beneficiary K-1s. The IRS is particularly attentive to large retirement distributions, so having clean, well-documented records from the start will make the filing process much smoother and reduce the chance of any follow-up questions.

Sorry for your loss, Liam. This thread has really covered the key points well, but I wanted to add one thing that might save you some headaches - make sure to get a copy of your dad's final pay stub or W-2 from his employer if he was still working when he passed. Sometimes employers have their own retirement contributions or deferred compensation that gets paid out separately from the 401k, and you want to make sure you're accounting for all retirement-related income that might flow to the estate. I've seen situations where families focused on the big 401k distribution but missed smaller amounts that still needed to be reported. Also, if your dad had multiple 401k accounts from different employers over the years, double-check that this is the only one. It's surprisingly common for people to have old 401k accounts they forgot about, especially if they rolled some money but left a small balance behind at a previous employer. The good news is you're being thorough upfront, which will make the whole process much smoother. With proper documentation and the estate 1041 filing, this should all flow through to you and your sister cleanly via the K-1s.

This is exactly the kind of detailed guidance that's been missing from this discussion! Thank you for breaking down each code type with the specific treaty considerations. I'm particularly interested in your mention of Form 8833 for treaty elections. Could you elaborate on when this is required versus optional? I've seen some sources suggest it's only needed for certain treaty positions, while others seem to indicate it's always required when claiming treaty benefits. Also, regarding the separation of income categories for Form 1116 - how do you determine whether Canadian pension income falls into "passive" versus "general" income categories? I assume Old Age Security would be passive, but what about employer-sponsored pensions or RRSPs? One more question: you mentioned attaching a statement explaining treaty positions. Do you have any recommendations for what should be included in such a statement, or is there a specific format the IRS prefers? Your approach of consulting with a cross-border specialist seems like it was worth the investment given how much conflicting information is out there on these issues.

I've been dealing with NR4 forms for several years now and want to clarify some of the confusion in this thread. The conflicting advice you're seeing is actually pretty common with international tax issues because there are often multiple "correct" approaches depending on your specific situation. Here's what I've learned from my experience and consultations with tax professionals: **The key factor is the US-Canada Tax Treaty provisions, which can override normal US tax reporting rules.** For **Code 39 (Pension)**: The reporting depends on whether it's a private pension or government pension. Private pensions are generally fully taxable in the US and can go on Line 5a of Form 1040. Government pensions may qualify for treaty benefits under Article XIX. For **Code 44 (Old Age Security)**: This is specifically addressed in Article XVIII of the treaty. As a US resident, you include it in your US taxable income, but you may be able to claim treaty benefits if Canadian tax was withheld. For **Code 46 (Other Income)**: This typically goes on Schedule 1 as "Other Income" unless it fits into a more specific category. **Important:** Always file Form 1116 for foreign tax credits on any Canadian taxes withheld. The income categorization (passive vs. general) on Form 1116 is crucial for maximizing your foreign tax credit. One thing I haven't seen mentioned yet is that if you have significant Canadian income, you might also need to consider whether you meet the threshold for filing Form 8938 (FATCA) or FinCEN Form 114 (FBAR) depending on your other Canadian financial accounts. My recommendation: Start with the conservative approach (reporting everything as "Other Income" on Schedule 1) and then consider whether treaty elections might provide additional benefits. Document your positions clearly in case of IRS questions.

As someone who's been preparing S-Corp returns for several years, I wanted to add a practical tip that might help with your Schedule L balancing act. When you're working through the equity side of Schedule L, it's helpful to think of it in terms of "what happened to the company's money." Your business earned $135,000, but $52,000 went to pay the officer (which reduces the earnings available to retain), and $26,000 was distributed to the shareholder. That leaves $57,000 that stayed in the company - hence the increase to Retained Earnings. One thing I always double-check is making sure the K-1 ordinary income ties back to the 1120-S net income after all deductions (including that officer compensation). In your case, the K-1 Line 1 should show $83,000 ($135,000 - $52,000) assuming no other deductions. Also, keep detailed documentation of that $52,000 officer salary justification. The IRS has been increasingly aggressive about challenging "unreasonable compensation" in S-Corps, especially when distributions are involved. Document the officer's duties, hours worked, industry salary surveys, and any other factors that support the reasonableness of the compensation amount. Good luck with your first 1120-S - it gets easier once you understand how all the pieces fit together!

This thread has been incredibly educational! As someone just starting to handle S-Corp returns, I'm amazed by how many interconnected pieces there are. The explanations about Schedule L and how the cash flow translates to retained earnings finally made it click for me. One thing I'm still wrapping my head around - if the business had taken out a loan during the year (say $20,000), would that appear as an increase in both cash and liabilities on Schedule L, without affecting the retained earnings calculation at all? I want to make sure I understand how financing transactions are treated differently from operational results. Also, reading about all the reasonable compensation documentation requirements is making me realize I need to be much more proactive about this with my S-Corp clients. It sounds like waiting until an audit to gather this information would be too late. Better to build these justification files from the start of each engagement. Thanks to everyone who contributed - this is exactly the kind of real-world guidance that helps bridge the gap between textbook knowledge and actual practice!

Quick tip from someone who messed this up their first job: you can always submit a new W-4 later in the year if you realize you made a mistake! I filled mine out wrong and was having wayyy too much withheld from each check. Fixed it in July and had proper withholding for the rest of the year.

Hey Omar! Congrats on landing your first job! 🎉 Since you mentioned you're 22, single, and this is your only job with no dependents, you're actually in one of the simplest W-4 situations. Here's what I'd recommend: 1. **Fill out Step 1** with your basic info (name, address, SSN, filing status as "Single") 2. **Skip Steps 2-4** entirely since you only have one job and no dependents 3. **Sign and date Step 5** That's it! This will give you standard withholding that should be pretty close to what you'll owe. You might get a small refund or owe a little, but nothing dramatic. One thing to watch for: when you get your first few paychecks, look at how much federal tax is being withheld. It should be roughly 12-15% of your gross pay for your income level. If it seems way off, you can always submit a new W-4 to adjust it. The IRS also has a withholding calculator on their website (irs.gov) that you can use mid-year to check if you're on track. Don't stress too much - you've got this! And remember, you can always adjust later if needed.